* Claims over abandoned nuclear plant "treacherous" - PM
* Analysts say may threaten to block gas pipeline
By Tsvetelia Tsolova
SOFIA, Sept 13 Bulgaria's prime minister said a
Russian demand for 1 billion euros ($1.3 billion) compensation
for an abandoned nuclear project was "treacherous", and analysts
said the row could obstruct plans for a Russian-backed gas
Russia's Atomstroyexport is claiming compensation over the
cancellation of the Belene nuclear plant it had been contracted
to build. The amount demanded could strain Bulgaria's finances,
as its economy slowly recovers from a deep recession.
"I truly hope that President Putin is not aware of that
move. If he knows, he would not enjoy our meeting on Nov. 9 in
Bulgaria," Prime Minister Boiko Borisov told reporters.
Russian President Vladimir Putin is expected to visit
Bulgaria, which is heavily dependent on Russian energy supplies,
on Nov. 9 to sign a deal for the construction of South Stream, a
pipeline planned to transport 63 billion cubic metres of gas
each year from the Black Sea to southern and central Europe.
The pipeline, estimated to cost over 15 billion euros, will
help maintain Russia's position as the major gas supplier to
"We are observing all our commitments on South Stream. For
Belene we continue to negotiate... That is why I think we have
been absolutely treacherously surprised by that claim," Borisov
Bulgaria cancelled the 2,000 MW Belene project in March
after it failed to attract Western investors and due to pressure
from its Western allies who were concerned about Bulgaria's
energy dependence on Moscow.
While Borisov did not specifically mention any moves to
delay or block South Stream, analysts said his remarks suggested
he was planning to use the gas project as a bargaining chip to
reduce the amount of compensation for Belene.
Moscow wants Bulgarian approval before it takes a final
investment decision on South Stream and starts construction of
the offshore section, run by Russia's Gazprom and Italy's Eni
, in December.
The South Stream consortium also includes France's EDF
and Germany's Wintershall.
Bulgarian officials say Atomstroyexport's claims are
unfounded and stand no chances in court.
"The government's idea is to include the claims for Belene
in the talks for South Stream. There is no way Bulgaria can pay
both the claim and let South Stream happen," said Ilian
Vassilev, an energy expert with Innovative Energy Solutions
Bulgaria, once Moscow's most obedient ally, has cooled its
relations with Russia after the centre-right cabinet of Borisov
put on review all major Russian-backed energy projects in the
country in 2009.
The European Union's poorest member gets almost all of its
gas from Gazprom, its only oil refinery is controlled
by LUKOIL and its only nuclear power plant Kozloduy is
Sofia has started to build gas links with neighbouring
countries and appointed Westinghouse, U.S. nuclear unit of
Japanese group Toshiba, to carry out a feasibility study for a
new reactor at Kozloduy.
It has promised to pay Atomstroyexport for the work it
carried out since 2006 but hoped to negotiate the cost down.
The Russian compensation claim has also put pressure on
Borisov to justify his energy policies to the public, with a
parliamentary election due next summer.
($1 = 0.7759 euros)
(Editing by Elaine Hardcastle)